Profiles of Chinese Business Angels

Abstract

We conducted a field study of 19 Chinese business angel investors who are active private equity investors in early-stage ventures. Our research questions are: who are these guys and how do they invest in start-ups within the world’s largest emerging market economy, which is lacking the fully developed financial and legal institutions needed to support private equity investing? Our findings indicate that Chinese BAs in our sample represent an impressive profile of highly educated, very experienced businessmen and women who are experienced private equity investors. They form informal institutions by actively networking with other angel investors to find deals for co-investing and together practice a hands-on, value-added post-investment strategy. Most impressively, the BAs in our sample, in spite of investing in an emerging economy, which lacks the fully developed institutions to effectively support private equity investing, report a high level of satisfaction with the performance of their investment portfolio, which is comprised of primarily seed- and early-stage companies.